B2B Trade 101: A Complete Guide to B2B International Trade

0 18


In recent times, the business world has seen more international trades than at any time in history. This is, of course, largely due to the widespread use of the internet and social media.

The world wide web created a platform for not just individuals but also businesses from all around the world to interact with one another. Consequently, this has created a fertile ground for the growth of B2B international trade.

As a business owner, you need to go beyond knowing the basics of B2B transactions. You should also understand the relationship between international trading and online B2B marketing. This knowledge is crucial to experiencing growth and expansion as a business in relation to e-commerce.

That’s why we’ve created this guide. After reading this article, you’ll have all the information you need to place your business on the international market scene.

What is International Trade?

Simply put, international trade is the buying and selling of goods or services across national borders. This trade may be either imports or exports. Imports mean that goods or services are brought into the country. Exports, on the other hand, refer to goods and services sold to another country.

These transactions are beneficial to countries for several reasons, including:

  • Variety: International trade provides a country with varieties of a specific product. This, in turn, gives citizens a wide array of options to choose from. Not only does this improve their quality of life, but it also helps the country grow as a whole.
  • Reduced dependency: International gives a country’s local market access to an unlimited number of customers. Reaching a global market is important as it reduces the economic pressure on the local market. This aids in the growth of a country’s economy.
  • More Employment: Since international trade gives a country a larger customer base, it requires more production of goods. This, in turn, creates a need for newer industries to cater to such production. Creating more companies helps generate more employment. This brings down the country’s unemployment rates.
  • Availability: There are certain commodities that a country cannot produce. International trade provides such countries with access to those kinds of products.
  • Use of Excess Produce: Via international trade, countries can sell their excess products to foreigners. By doing that, they can earn foreign exchange.
  • Fosters Peace and Goodwill: International trade helps to foster peace and goodwill among countries. Since they become economically interdependent, they develop a close cultural relationship.

Of all the types of transactions that take place within the international marketplace, B2B stands out. The term, B2B, refers to transactions that take place between two businesses. As such, B2B international trade entails the exchange of goods and services between businesses from different countries.

This trade may involve a company supplying raw materials to another company. The buying company then processes them into finished products. Other times this transaction can involve a company taking the place of wholesalers while the other company acts as a retailer.

9 Characteristics of B2B Market

B2B transactions have specific features that set them apart from b2c trading. These features are key in understanding how B2B trading operates. Some of the characteristics of the B2B market include:

#1. A complex decision-making unit

Making a decision is easier for one individual than it is when it involves many people. That’s why decision-making in b2c transactions is simpler. The customer alone decides if they want to buy from the business or not.

However, in B2B transactions, the decision-making process is more complex. This is because there are multiple steps involved in making a decision as a business. There are also various individuals involved.

These individuals are usually specialists in one area or the other. They come together to use their combined knowledge to decide on what is best for the company. This often leads to long deliberation periods before they take any step.

However, not every decision a business makes requires deliberations. Some decisions like purchasing a stapler are low risk. A junior employee can make such decisions without calling for a meeting.

What determines the need for deliberation is the risk and value attached to the products. Based on such risks and values, products fall under four categories which are:

  • Low-risk, low-value purchases: These are products that do not require deliberations. Little thought goes into purchasing such products. This is because making a wrong decision while buying them poses little to no financial risk. Furthermore, the nature of these products makes them easy for an employee to make the purchases themselves. Examples of such products include paper clips, safety pins, etc.
  • Low-risk, high-value purchases: These are commodities like raw materials. Purchasing this category of products requires the assistance of specialists. It also involves the approval of the company’s senior executives. As such, deliberations must take place before the company purchases the product. These deliberations are necessary so that the company can buy quality products at a minimized price.
  • Low value, high-risk products such as insurance packages. These purchases require the presence of experts and top officers in the company. This is because the risk is in the product and not on the price. Therefore, before any such transaction can occur, the company must consult with an expert on the matter.
  • High value, high-risk purchases. These are products that call for deliberations by every board member and decision-making unit. For instance, a CFO, CEO, Purchasing Director, Production Director, and other top management department leaders will need to deliberate before purchasing plant equipment.

The implication of these for B2B marketers is that they will have to show a high level of expertise when interacting with the target audience. Showing a high level of expertise will help convince a buying company to purchase a product.

#2. Rational buyers

In b2c markets, a consumer can decide to buy a product based solely on sentiments. However, this is not the case when a company wants to buy a product. This is because various specialists come together to deliberate on whether or not the company should make a purchase.

This gives little to no room for sentiments. As such, companies will always go for products that offer more benefits irrespective of whose feelings might get hurt.

The implication of this is that B2B marketers must strive to make their products top quality. Otherwise, they can lose their customers to another company selling better products.

#3. Deeper product description

A company selling a product or service will have to describe its products in a way that convinces the target audience. They must bear in mind that the international company they are selling to consists of experts and specialists. The description of the product must, therefore, appeal to them.

For b2c transactions, a selling company may not need to go into details of how a product works to convince consumers. However, in B2B transactions, a supplier will have to explain to a buying company how a product works to achieve its goal.

The effect of this is that a selling company has to show some level of expertise in selling their products to another company. If they hope to convince purchasing companies, they must learn to give a detailed analysis of their products. That way, they can get new customers.

#4. Limited customers

In B2B marketing, it is common to see a selling company with a limited number of customers. However, this limited customer base makes sales that dominate the ledger. This is because these companies buy in large quantities. The quantity that a company purchases will often outweigh those of a regular customer. It doesn’t matter that the customer uses the product very often.

The implication of this for suppliers is that they can keep records of the demands of their customer companies. This allows a supplier to know what the customer wants. As such, they can build long-term relationships with their consumer companies.

Furthermore, purchasing companies are usually looking for partnerships. They want a company they can trust to produce quality stocks. But that’s not all. They also want a company that will hold on to stocks on their behalf.

As a B2B marketer, you must be ready to provide these value-added services to your customers. Otherwise, you may lose them to another company that’s prepared to do so.

Providing these services will further cement the relationship between both companies.

#5. Fewer customer-based segments

As already stated, B2B markets involve a limited number of customers. This limited number of customers makes it easy to categorize customers into different segments. You categorize them based on their needs and behaviors.

When it comes to B2B transactions, there are fewer behavioral-based segments. A buying company will hardly allow whims, insecurities, indulgences, and sentiments to influence their purchase of a product. This is because the purchase is not for an individual but a group. Also, different members play a role in the decision-making.

These features result in fewer segments which are:

  • Companies that focus on price. These companies are always price-conscious. They are always looking for means to beat down the price of a product. They’re more focused on the price of a product than on its quality.
  • Quality and brand-focused companies. Companies such as this are willing to pay any amount for a product, as long as what they are getting is top quality. Companies in this segment are usually medium to large-scale organizations.
  • Companies…



Read More:B2B Trade 101: A Complete Guide to B2B International Trade

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.